Breaking Down Fintech Silos

Fintech is about disruption. Making life easier for financial institutions to manage their responsibilities and easier for account holders to manage their full financial picture. Some fintech companies partner directly with financial institutions, while some offer products directly to account holders, completely bypassing the financial institution. Other companies seek to replace financial institutions completely, such as Moven and GoBank, referred to as NeoBanks.

Now recognizing that fintech can be both an ally and a competitor - who do you talk to now? Which aspect of the fintech space will be most advantageous for institutions to partner with? Just briefly going through the options is overwhelming. Institutions soon realize there are potentially four or five fintech providers it would be advantageous to partner with. Each fintech solution provider offers an adequate solution to one problem.

This chart, created by Innotribe, illustrates 152 new startup fintech companies eligible to participate in a startup challenge they sponsor. (The size of the circle correlates with amount of startups focused on that silo, some companies are tagged with multiple areas.)

Keep in mind - this illustrates just the new startups and doesn’t taken into account the fintech companies that have been around awhile. Financial institutions recognize that they need solution providers but the choices are endless.

So, after looking at their endless options let’s say a financial institution picks four different solutions providers to meet all their needs. Logistics then becomes a nightmare. Each solutions provider needs time dedicated to their product, each has paperwork, fees, etc.

Where is the one-stop shop?

The financial industry continues to take a siloed approach to providing financial services. Financial institutions are having to manage several partnerships to provide the full spectrum of services to keep their account holders satisfied.

Some companies have already discovered the value of solving more than one problem. Some fintech providers are discovering the tools they provide can impact several other aspects within the industry. Take personal financial management (PFM) for example, according to the chart above, PFM links directly to big data analytics, visualization, digital currency and lending solutions.

So what to do about it? It’s time for fintech providers to break down the siloed approach to financial services and discover how to become a financial institution's primary solutions provider.